What are the types of funds available in NPS?

NPS offers two accounts: Tier-I and Tier-II accounts. Tier-I is a mandatory account and Tier-II is voluntary. The big difference between the two is on withdrawal of money invested in them. You cannot withdraw the entire money from Tier-I account till your retirement. Even on retirement, there are restrictions on withdrawal on the Tier-I account. The subscriber is free to withdraw the entire money from the Tier-II account.

The NPS offers two investment choices:

Active Choice: This option allows the investor to decide how the money should be invested in different assets.

Auto choice or lifecycle fund: This is the default option which invests money automatically in line with the age of the subscriber.